Head to Head Review: Reliance (NYSE:RS) & McGrath RentCorp (NASDAQ:MGRC)

Reliance (NYSE:RS) and McGrath RentCorp (NASDAQ:MGRC) are both industrials companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, risk, valuation, profitability and earnings.

Profitability

This table compares Reliance and McGrath RentCorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Reliance	5.65%	12.51%	8.47%
McGrath RentCorp	16.38%	12.44%	6.38%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Reliance and McGrath RentCorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Reliance	1	5	2	1	2.33
McGrath RentCorp	0	2	1	0	2.33

Reliance presently has a consensus price target of $379.83, suggesting a potential downside of 2.63%. McGrath RentCorp has a consensus price target of $140.00, suggesting a potential upside of 26.25%. Given McGrath RentCorp’s higher possible upside, analysts plainly believe McGrath RentCorp is more favorable than Reliance.

Earnings & Valuation

This table compares Reliance and McGrath RentCorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Reliance	$14.29 billion	1.39	$739.40 million	$17.20	22.68
McGrath RentCorp	$944.23 million	2.87	$156.31 million	$6.21	17.86

Reliance has higher revenue and earnings than McGrath RentCorp. McGrath RentCorp is trading at a lower price-to-earnings ratio than Reliance, indicating that it is currently the more affordable of the two stocks.

Dividends

Reliance pays an annual dividend of $5.00 per share and has a dividend yield of 1.3%. McGrath RentCorp pays an annual dividend of $1.98 per share and has a dividend yield of 1.8%. Reliance pays out 29.1% of its earnings in the form of a dividend. McGrath RentCorp pays out 31.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Reliance has raised its dividend for 15 consecutive years and McGrath RentCorp has raised its dividend for 33 consecutive years. McGrath RentCorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Reliance has a beta of 0.96, suggesting that its share price is 4% less volatile than the S&P 500. Comparatively, McGrath RentCorp has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500.

Insider & Institutional Ownership

79.3% of Reliance shares are owned by institutional investors. Comparatively, 92.0% of McGrath RentCorp shares are owned by institutional investors. 0.4% of Reliance shares are owned by company insiders. Comparatively, 1.4% of McGrath RentCorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Reliance beats McGrath RentCorp on 10 of the 17 factors compared between the two stocks.

About Reliance

Reliance, Inc. operates as a diversified metal solutions provider and the metals service center company in the United States, Canada, and internationally. The company distributes a line of approximately 100,000 metal products, including alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium, and specialty steel products; and provides metals processing services to general manufacturing, non-residential construction, transportation, aerospace, energy, electronics and semiconductor fabrication, and heavy industries. It sells its products directly to original equipment manufacturers, which primarily include small machine shops and fabricators. The company was formerly known as Reliance Steel & Aluminum Co. and changed its name to Reliance, Inc. in February 2024. Reliance, Inc. was founded in 1939 and is based in Scottsdale, Arizona.

About McGrath RentCorp

McGrath RentCorp operates as a business to business rental company in the United States and internationally. It rents and sells relocatable modular buildings, portable storage containers, and electronic test equipment. The company operates through four segments: Mobile Modular, Portable Storage, TRS-RenTelco, and Enviroplex. The Mobile Modular segment rents and sells modular buildings designed for use as classrooms, temporary offices adjacent to existing facilities, sales offices, construction field offices, restroom buildings, health care clinics, child care facilities, office spaces, and various other purposes. The TRS-RenTelco segment rents and sells general purpose electronic test equipment, such as oscilloscopes, amplifiers, analyzers, signal source, and power source test equipment primarily to aerospace, defense, electronics, industrial, research, and semiconductor industries. It also provides communications test equipment, including network and transmission test equipment for various fiber, copper, and wireless networks to the manufacturers of communications equipment and products, electrical and communications installation contractors, field technicians, and service providers. The Portable Storage segment offers steel containers to provide a temporary storage solution. The Enviroplex segment manufactures and sells portable classrooms directly to public school districts and other educational institutions in California. The company was incorporated in 1979 and is based in Livermore, California.